* Three south Sudan party leaders arrested, then released
* Police use tear gas and batons to break up protests
* Ruling party office set on fire in southern town
(Adds background, Amnesty condemnation, government quotes)
By Andrew Heavens
KHARTOUM, Dec 7 Police arrested three senior members of south Sudan's main political party and scores of supporters at a rally held outside Sudan's parliament on Monday in defiance of an official ban, witnesses and officials said.
The three men were later released and two, Pagan Amum, secretary general of the Sudan People's Liberation Movement, and his deputy Yasir Arman, received a hero's welcome at their party's headquarters in Khartoum, a Reuters witness said.
The SPLM and opposition parties had called the rally to demand democratic reforms ahead of next year's elections in a rare public challenge to President Omar Hassan al-Bashir's dominant northern National Congress Party (NCP).
Sudanese authorities announced on Sunday the rally was banned.
The SPLM joined a coalition government with the NCP under a 2005 peace deal that ended more than two decades of north-south civil war in the oil-producing country.
Relations between the former foes have been troubled and Monday's arrests will strain them further in the highly-charged run-up to the elections in April, which would be Sudan's first multi-party poll in 24 years.
Arman was detained after scuffling with police early on Monday outside the parliament, a Reuters witness said. The SPLM said later police also arrested Amum and Sudan's state interior minister Abbas Juma, an SPLM member.
Hundreds more banner-waving supporters gathered in the area and other parts of Khartoum's Omdurman suburb after the arrests and were dispersed by police using tear gas.
"The situation is brutal. More than 100 SPLM members have been arrested and many more other protesters have been detained," SPLM spokeswoman Keji Roman told Reuters.
Senior SPLM official Anne Itto said the news caused anger in the south, where attackers set fire to the NCP's headquarters in Wau, the capital of Western Bahr el Ghazal state.
NCP official Ibrahim Ghandour said the protest had not been banned by his party but by Sudan's Interior Ministry which declared it illegal because organisers had failed to apply for permission to hold the event.
"The National Congress Party is not against democratic action including protests and rallies," he told Reuters.
Ghandour later told state media police arrested 35 people during the protests and Arman was not arrested but "joined the arrested persons willingly".
Security services also decided to stop the rally because of "information received ... on the intent of the circles organising of the demonstration to perpetrate anarchy and to use Molotov bombs," NCP official Mandour el-Mahadi told Sudan's state news agency Suna.
Amnesty International condemned what it said was the arrest of more than 200 people, including human rights activists.
Two million people were killed and 4 million fled their homes between 1983 and 2005 when Sudan's north and south fought over differences in ideology, ethnicity and religion. (Additional reporting by Khaled Abdel Aziz in Khartoum and Skye Wheeler in Juba; editing by Andrew Dobbie)